MINUTES of the THIRD MEETING of the ECONOMIC AND RURAL DEVELOPMENT COMMITTEE August 19, 2015 Belen Public Library Belen The third meeting of the Economic and Rural Development Committee (ERDC) was called to order by Senator Benny Shendo, Jr., chair, on August 19, 2015 at 9:12 a.m. at the Belen Public Library in Belen. Present Absent Sen. Benny Shendo, Jr., Chair Rep. Dianne Miller Hamilton, Vice Chair Sen. Ron Griggs Sen. Jacob R. Candelaria Rep. Rick Little Rep. D. Wonda Johnson Sen. Richard C. Martinez Sen. Michael Padilla Sen. John Pinto Rep. Debbie A. Rodella Rep. Patricia Roybal Caballero Sen. Pat Woods Rep. Bob Wooley Rep. John L. Zimmerman Advisory Members Rep. Eliseo Lee Alcon Rep. George Dodge, Jr. Sen. Craig W. Brandt Rep. Jimmie C. Hall Sen. Lee S. Cotter Sen. Carroll H. Leavell Rep. Nora Espinoza Rep. Patricia A. Lundstrom Rep. Bealquin Bill Gomez Sen. Mary Kay Papen Sen. Mark Moores Rep. Nick L. Salazar Rep. Dennis J. Roch Sen. William E. Sharer Guest Legislators Rep. Alonzo Baldonado Rep. Kelly K. Fajardo Rep. Miguel P. Garcia Staff Monica Ewing, Staff Attorney, Legislative Council Service (LCS) Celia A. Ludi, Staff Attorney, LCS Erin Bond, Intern, LCS Guests The guest list is in the meeting file. Handouts Copies of all handouts are in the meeting file. Wednesday, August 19 Welcoming Remarks Senator Shendo welcomed members of the committee, staff and guests to the meeting. Committee members and LCS staff members introduced themselves. The minutes of the ERDC's second meeting were approved unanimously without amendment. Senator Michael S. Sanchez welcomed the committee to his hometown. Jerah Cordova, mayor of Belen, welcomed the committee and provided a brief overview of Belen's history and current economic status. He informed the committee that Belen was founded in 1741 as a Spanish land grant and that it maintains traditions such as a 222-year-old fiesta. Although the 2008 recession had a severe impact on Belen, including substantial cuts in city government employees and services, there are signs that the city's economy is slowly recovering. Vacancies in commercial real properties remain high, but overall commercial revenue is stable. The former Solo Cup manufacturing facility in the area is vacant, but the city is working to identify an occupant for the space. Mayor Cordova said that Valencia County is in need of jobs and that its assets include the area's airport, railroad and convenient access to Interstate 25 and Albuquerque. The mayor listed a number of infrastructure construction projects under way in Belen, including Highway 6, the Main Street overpass, flood control projects, a new water tank, a new airport runway and road repairs. He added that the housing market is fast recovering. He asked the committee for its continued support of the film industry, which has benefited the area. He noted that the city has accrued its largest-ever budget surplus of $1 million. - 2 - Economic Development Department (EDD) Update — Local Economic Development Act (LEDA) — New Mexico Film Office Jon Barela, secretary of economic development, introduced Nick Maniatis, director of the New Mexico Film Office (office), who related that 2015 has been the strongest year for the film industry in the state since the inception of the film incentive credits program. In response to questions from committee members, Mr. Maniatis said that the office, in addition to working to attract feature films, is prioritizing recruitment of television series because they provide longer-term, more stable employment for New Mexico crew members. Films introduce a lot of money into New Mexico's economy for a short period of time, but television productions contribute revenue over a longer time period. Television series production schedules, because they are often less stringent, allow for the use of local vendors and provide greater opportunities for crew members' professional growth. Mr. Maniatis said that game shows, reality television shows and music shows require sound stages that are rated for audiences, and that just one of the state's four studios has such a sound stage. For that reason, production of those kinds of shows is limited in the state. Mr. Maniatis said that the office is preparing a report on film industry jobs in the state, which will include information about job benefits such as health care insurance and unemployment insurance. He advised the committee that the office does not plan to propose legislation addressing the film incentive program during the 2016 legislative session. Secretary Barela provided an update on the Job Training Incentive Program (JTIP) and on the LEDA. He noted that the recent announcement that Google will withdraw its Titan Aerospace solar-powered drone development project from Moriarty is an example of the effective clawback provisions used in LEDA project contracts. Because of the clawback provision in Google's contract with the state, Google will return nearly $1 million in state economic assistance funds to the state, and the water and sewer line extensions built for the project will remain in place. In response to questions from the committee, Secretary Barela noted that LEDA requirements allow more flexibility than JTIP, and the LEDA guidelines include a prohibition on funding retail projects because the jobs generated in retail are generally minimum wage and are often not permanent full-time jobs. Secretary Barela confirmed that in consultation with the governor, he makes decisions regarding the provision of funds for a LEDA project. He said this process allows the EDD to be efficient in responding to companies seeking to locate in the state. He added that the decision to provide LEDA funds as a post-performance award or prior to a project's completion is made on a case-by-case basis. Secretary Barela said that he has received feedback from employers that chose not to locate in New Mexico, citing work force issues as the primary factors in their choices. They - 3 - identified issues such as: insufficient preparation and education of workers; lack of employee "soft skills"; and employees' inability to pass drug tests. Photonics — University of New Mexico (UNM) Sanjay Krishna, director of the Center for High Technology Materials (CHTM) at UNM, and Earl Fuller, strategic support manager, CHTM, advised the committee that the CHTM focuses on application of research. The CHTM has attracted more than $260 million in state funding, roughly 89% of which has been spent in New Mexico. This year, the CHTM will likely request an appropriation of $10 million to be used over five years to establish a freestanding regional hub to build on optics and photonics work currently being undertaken in New Mexico. As a freestanding institution, the hub will not be tied solely to UNM, and Dr. Krishna and Mr. Fuller have already reached out to New Mexico State University and the New Mexico Institute of Mining and Technology to expand partnerships and develop applications for research in these areas in the state. Workers' Compensation — New Mexico Court of Appeals' Decision — Farm and Ranch Worker Exclusion Gail Evans, legal director of the New Mexico Center on Law and Poverty, explained the background of a recent Court of Appeals case and the effect of the court's decision, which held that the exclusion of farm and ranch workers from coverage under the Workers' Compensation Act is unconstitutional. The court applied that decision retroactively to March 30, 2012, when a district court judge in Albuquerque first declared the provision unconstitutional. The decision means that farm and ranch employers with more than three workers will be required to obtain workers' compensation coverage for farm and ranch workers, in addition to other already-covered employees. It also means that claims for workers' compensation by farm and ranch workers that were pending as of March 30, 2012 must be considered by the Workers' Compensation Administration (WCA). Darin A. Childers, director of the WCA, informed the committee that an appeal of the court's decision was filed in the New Mexico Supreme Court. He added that the WCA is currently enforcing the Court of Appeals' decision and that it provides a fact sheet about the application of that decision on its web site. The committee members discussed the presenters' comments, and, in response to several committee members' questions, Mr. Childers explained that workers' compensation insurance rates are based on an employer's payroll, and the Workers' Compensation Act does not exclude family members of an employer, seasonal workers or day workers. In response to a committee member's question, Ms. Evans said that California and Arizona require employers to provide workers' compensation coverage for all workers, that Utah and Colorado require coverage for farms of a certain size and that Texas does not require coverage for any workers. - 4 - Workers' Compensation — WCA Annual Report Mr. Childers presented the WCA Annual Report for 2014 and provided committee members with a copy of an informational brochure published by the WCA. He opined that most businesses are able to find affordable coverage. He informed the committee that the WCA will request a special appropriation of $250,000 to perform a system-wide study, which was last done in 2000. Economic Development Programs of Los Alamos National Laboratory (LANL) and Sandia National Laboratories (SNL) — Small Business Tax Credit Update Micheline Devaurs, program manager for market transition, LANL, presented her report titled "Feynman Center for Innovation: Helping to Create Jobs and Diversify the Economy in Northern New Mexico". Kathy Keith, a representative of LANL, presented her report titled "Community Programs Office: Helping to Create Jobs and Diversify the Economy in Northern New Mexico". Jackie Kerby Moore, technology and economic development manager at SNL, presented her report titled "Sandia National Laboratories Economic Development".